Asset Allocation | Portfolio Updates
Asset Allocation Update: Cash Wins on Recession Shock
- By Bilal Hafeez
- 3 min read
June was a brutal month for markets. Equities were down 9%, commodities fell 8%, corporate bonds fell between 3% and 7%, EM bonds dropped 5%, and crypto plunged 40% to 50%. Government bonds did the least bad, with only a 1% decline. It is unusual for every asset to decline in a month, but June was that month. Worryingly, July has started on a weak footing too.
What caused this? Certainly, a surprise Fed hike of 75 basis points, which raised policy rates to 1.75%, harmed risk markets. Then there was a steady stream of weak activity data, which saw recession fears increase dramatically. Our recession model had been citing this risk for several months, and broader markets appear to have caught up to the view.
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